Transcript of Interview, RN Drive, Radio National

Interview

BPC014/2014

13 March 2014

RN Drive, Radio National

Waleed Aly: Now, here's the problem. We need to spend a lot of money on infrastructure. We've got infrastructure problems. You don't need me to tell you that, you were probably stuck in traffic or whatever it was this morning. So we need to spend that money. We don't have a tax system though that seems to be able to respond to it so we have to find savings or we have to change the tax system. We've got to do something. And now we're told by the Productivity Commission that a billion dollars could be saved each year if governments just improve the way they plan and finance infrastructure projects and they've suggest more private investment and more user charges even for road users. That always gets people fired up. Here is Peter Harris who is the chairman of the Productivity Commission speaking to RN Breakfast.

[Excerpt]

Peter Harris: Over time you can move from paying [indistinct] tax to paying by direct charging...

Fran Kelly: So does that mean instead of paying through annual rego fees or your petrol excise(*), you would pay because you can be tracked on your car for every kilometre you drive, you pay directly for what you drive and on the roads you drive and that goes directly to funding those roads?

Peter Harris: And it's an efficient way to select roads as a consequence of that. But those roads that are paid for are the ones as you referred to earlier that we want to pay for and we choose to pay for and we're involved in paying for as user roads.

[End of excerpt]

Waleed Aly: There you go—what do you think of that idea? Government doesn't seem to like it—it seems to have poured cold water on that suggestion today. Joining me now is Jamie Briggs, Assistant Minister for Infrastructure and Development. Jamie Briggs, thank you very much for your time. What's wrong with that idea?

Jamie Briggs: We haven't said there's anything particularly wrong with the idea. As you say, an idea and a draft Productivity Commission report which we've had commissioned to get better value for taxpayers and then sure we get a better infrastructure system. The reality is even if you agreed with the idea today you couldn't implement it tomorrow because the technology's not advanced enough to be able to track and price as it suggested. But what the Productivity Commissioner is saying is that this is something that you should look at over time.

So, what we've made today is this is not a priority for us. What is a priority is to fix up the mess we were left as far as the current infrastructure system and there are 600 pages worth of information in this report talking about, as you said in your introduction, how we could get better value for taxpayers, how we could reduce a billion dollars in unnecessary cost each year in infrastructure investment by doing it better, working with the states and local government better to build and maintain our road network so that we get better economic infrastructure and people drive on better roads and we get better economic outcomes.

Waleed Aly: Are you philosophically sympathetic though to the idea of having the private sector involved in, effectively, a user pays model for particularly road infrastructure?

Jamie Briggs: Well, we have a user pays model today. We pay every time we fill up our petrol tank a petrol excise, so a tax in effect which is collected extensively to go to road upgrades. We pay registration charges at a state level and we pay for certain roads depending on which city you live for access to by toll. So there are user charges already. What the Productivity Commission is saying is well, is there a better way to collect these taxes in effect in a revenue neutral basis as it says in the report, in the future and it canvasses an idea and that's what...

Waleed Aly: That's one idea but it's making a broader point that our infrastructure would need to have this kind of public funding in user pays approach and just more commonly and more generally that we have to then make sure that we're building roads people actually want to drive on rather than building tollways that widely over project how many people actually want to use those roads.

Jamie Briggs: Well that's a very good point and that's why it's saying let's make decent economic decisions on the investments that you want to make as a government on behalf of taxpayers, and the reality is the examples it points to is where there have been some failures and the biggest failure it points to is the decision making process around the former government's investment in the NBN. It says it was based on political considerations, not on economic justification and therefore you've wasted unnecessary taxpayers money in that respect.

Waleed Aly: Well lots of those examples you pointed—umpteen roads in Sydney and Brisbane tunnels and the like that have fallen over. We seem to have got this wrong quite a lot.

Jamie Briggs: Well there are some good examples. In Melbourne, for instance, the CityLink is an example where the project stacked up economically and made a big difference for the consumers. So it's very hard to imagine Melbourne without CityLink today isn't it?

Waleed Aly: Yeah but now you've also got the East West Link which is now being debated and you've got transport operators saying it's not going to work, the business case doesn't make sense, we can't get access to it. I mean there's a problem with the whole process here isn't there and it's bipartisan, I mean we're talking about a coalition government in Victoria.

Jamie Briggs: Well no, we've put in place what we think are important reforms to Infrastructure Australia which are in the senate to have a judgement made or a cost benefit analysis made on big spends by government. We think East West project does add up and there is always going to be critics with big infrastructure investments. But...

Waleed Aly: Well no the point is some of those critics are the businesses that would stand to gain money if it did stack up.

Jamie Briggs: There is always interest in this, we should remember. We think ultimately though that this project is an important project for Melbourne and that's why we're committed to it and the cost benefit analysis does stack up. In relation to Sydney there's a proposal for a—what is called the WestConnex project which will cut the travel time from the western suburbs to the airport by some 40 minutes when it's been put in place. These are big projects but we often focus on the big projects. What the PC draft report has done today is also talk about investment in smaller projects or the existing network and that is at times equally important in ensuring you're keeping your network updated and that you're doing it in a way that you're getting best value for taxpayers money.

Waleed Aly: Why do they always seem to be talking about roads?

Jamie Briggs: Because a lot of Australians drive on them.

Waleed Aly: Because they haven't got much choice. We could give them other choices.

Jamie Briggs: Well, they choose to drive on them.

Waleed Aly: Because they don't have the choice. This is the whole point.

Jamie Briggs: No. Well, Australia's a big country and our cities are laid out in a sparse way. They cover a large distance, and so most Australians choose to drive their car. That's a reality of our country.

Waleed Aly: Our cities are no bigger than London or New York.

Jamie Briggs: Well, they're very different in a percentage population. I don't think we've got a city which has got 16 million people living in it.

Waleed Aly: No. Well, we wouldn't even abide the suggestion. That's a whole other conversation.

Jamie Briggs: That is ultimately a choice that people make. Australians like to have some space and I think that should be something that we allow people to make that choice for. The idea that you socially engineer how families live is not something that we support. So people do like to drive their cars. There is a role for public transport, absolutely, and state governments have got an important responsibility in ensuring our public transport systems work as well as they can.

And Infrastructure Australia will make recommendations in that respect, I have no doubt, when they work with the state governments on those issues. But ultimately we think the best way for federal governments to ensure we've got the most productive economy we can have is by having the best road system we can have.

Waleed Aly: If we're always going to go down this path, though, don't we end up with effectively like a discriminatory tax for people who live in the outer suburbs, because they're the ones who are going to have to use these toll roads, they're the ones who are going to have to use more petrol, they're the ones who are going to have to pay more. And all the infrastructure we build is going to be bleeding them far more than it bleeds anyone who lives in a city.

Jamie Briggs: Well, it does now.

Waleed Aly: Right. So can't we fix that instead of exacerbate it.

Jamie Briggs: Well, we don't exacerbate it. We provide infrastructure for people where—I mean, I don't think you can make the accusation that governments over the years have built roads for future suburbs. I think the problem at the moment is catching up on what isn't there, and that's the reality of what we're trying to do at the moment.

Waleed Aly: The other side of the equation is the tax side of the equation. I don't know if you caught up with the former Treasury Secretary Ken Henry, who is now speaking very much like he's former and he's speaking out, talking about the tax side of it, the mining tax was badly handled and we desperately needed it, but also the GST. It will eventually have to go up. Every grown up economist in the room seems to agree with this. The politicians don't want to talk about it. Do you accept its inevitability at some point?

Jamie Briggs: Well, I mean, firstly I don't agree with the proposition that we needed a mining tax. In fact, it was completelyâ€¦

Waleed Aly: No, I know you don't. I'm just stating his position.

Jamie Briggs: Well, it's a completely flawed policy. It has been proven to beâ€¦

Waleed Aly: I'm just stating his position, but let's talk about the GST.

Jamie Briggs: Well, no, and I'm not sure he did say that. I watched The 7.30 Report interview last night and Dr Henry is someone who has got long experience in the Treasury and should always be someone we listen to. He also argued that the GST didn't need urgent amendment or change, but what he did say and he's right about this, is it's a state tax, and if the states want to change the GST or think they need to have an increased amount of revenue from it, they should make the argument to do so because it doesn't benefit the federal coffers, it benefits the state.

Waleed Aly: You say it's a state tax. It was introduced by the Federal Government. If the rate changes, it'll be the Federal Government ultimately that does it as a matter of legislation.

Jamie Briggs: No. It needs agreement under the current legislation from the state premiers to do so. So it is ultimately given purely to the states. It is revenue that goes straight to the states. But in any event, the broader point here is that the assumption that Australians don't pay enough tax is not something that we agree with. We don't think Australians are under taxed. In fact, we think they are over taxed, and that's why we're trying to abolish two unnecessary taxes in the first place, in our view, to help Australians get on and be more successful and more prosperous.

Your reflections on a range of issues there—0418226576. Do you pay too much tax? Do we pay too much tax? Should we pump everything into roads or public transport? No shortage of issues to get stuck into.